myanmar metals limited for personal use only · 10/24/2019 · myanmar metals limited confirms...
Post on 21-Mar-2020
2 Views
Preview:
TRANSCRIPT
1
MYANMAR METALS LIMITED ANNUAL GENERAL MEETING
CHAIRMAN’S ADDRESS24 OCTOBER 2019
ASX:MYL
MYANMAR METALS IS A PROUD MEMBER OF
For
per
sona
l use
onl
y
Important Notices
2
FORWARD LOOKING STATEMENTS
This presentation contains “forward looking statements”. Such “forward looking statements” may include without limitation: estimates of future earnings, the sensitivity of such earnings to metal prices and foreign exchange rate movements; estimates of future metal concentrate production; estimates of future cash costs; estimates of future cash flow, the sensitivity of such flows to metal prices and foreign exchange rate movements; statements regarding, future debt payments; estimates of future capital expenditure; estimates of reserves, resources and statements regarding future exploration results.
Where the Company expresses or implies an expectation or belief as to future events or results such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, “forward looking statements” are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such “forward looking statements”. Such risks include but are not limited to metal prices, currency fluctuations, increased production costs and variances in grades or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries and states in which the Company operates or sells product and governmental regulation and judicial outcomes.
The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, expect as may be required under applicable securities laws.
COMPETENT PERSONS STATEMENTS
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the ‘JORC Code’) sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The Information contained in this announcement has been presented in accordance with the JORC Code.
The information in this report that relates to Geology and Exploration Results is based, and fairly reflects, information reviewed and compiled by Mr Andrew Ford, who is a Member of the Australian Institute of Mining and Metallurgy. Mr Ford is an employee of Myanmar Metals Limited. Mr Ford has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Ford consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Mineral Resources is based, and fairly reflects, information compiled by Mr Serikjan Urbisinov, who is a Member of the Australian Institute of Geoscientists. Mr Urbisinov is a full-time employee of independent, resource industry consultancy CSA Global Pty Ltd. Mr Urbisinov has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Urbisinov consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Ore Reserves is based on, and fairly reflects, information compiled by Mr Daniel Grosso and reviewed by Mr Karl van Olden, both employees of CSA Global Pty Ltd. Mr van Olden takes overall responsibility for the Report as Competent Person. Mr van Olden is a Fellow of The Australasian Institute of Mining and Metallurgy and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as Competent Person in terms of the JORC (2012 Edition). The Competent Person, Karl van Olden has reviewed the Ore Reserve statement and given permission for the publication of this information in the form and context within which it appears.
REFERENCES TO ORE RESERVES, MINERAL RESOURCES AND PRE FEASIBILITY STUDY (PFS)
Ore Reserve estimates are reported in accordance with the JORC Code 2012 Edition as announced on 6 May 2019. Myanmar Metals Limited confirms that it is not aware of any new information or data that materially affects the Ore Reserve information included in the market announcement dated 6 May 2019 and, in the case of estimates of Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The cut-off used for the determination of Ore Reserves is a net value per block of ore (net smelter return).
Mineral Resource Estimate reported in accordance with the JORC Code 2012 Edition as announced on 8 August 2019. Myanmar Metals Limited confirms that it is not aware of any new information or data that materially affects the Mineral Resource information included in the market announcement dated 8 August 2019 and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. A 0.5% Pb cut-off above 750m RL, 2% Pb below 750m RL has been used for the 100.6 Mt Indicated and Inferred Resources and the 42.4 Mt Indicated Resource. The high grade 47Mt Indicated and Inferred Resources has a global cut-off of 2% Pb.
The PFS was announced on 6 May 2019. Myanmar Metals Limited confirms that it is not aware of any new information or data that materially affects the PFS information included in the market announcement dated 6 May 2019 and, in the case of the PFS, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed.
For
per
sona
l use
onl
y
A story of continued growth…
3
0
20
40
60
80
100
120
2017 2018 2019
Mt
Indicated and Inferred Mineral Resource Estimates 1
0
10
20
30
40
50
2017 2018 2019
Mt
Reserve Indicated
Ore Reserve and Indicated Mineral Resource Estimates 1
Growth in Scale Growth in Quality
Success in Drilling New Targets 2
0
1
2
3
4
5
2017 2018 2019
Growth in Resource Potential
Project Studies
2017
None
2018 2019
Pre-Feasibility Study
Scoping Study
2020
Definitive Feasibility Study
Cash Position 2
0
5
10
15
20
25
30
2017 2018 2019
A$
m.
Greater Confidence in ProjectStronger Financial Position
0
20
40
60
80
100
2017 2018 2019
A$
m.
Market Capitalisation 2
No Growth in Equity Value?
Loss in Enterprise Value
For
per
sona
l use
onl
y
4
A major de-risking of the project is fast approaching.
Q4 CY 2019 Q1 CY 2020
Construction to commence
DFS to be completed
MIC Permit to be secured
Project finance to be secured
ESIA to be completed
Offtake & finance negotiations
Bawdwin expansion studies
Short term milestones to close the value gap
Q2 CY 2020 Q3 CY 2020
Exploration program commences
For
per
sona
l use
onl
y
Compelling Investment Proposition
5
Bawdwin is a Tier 1 project and will be a globally significant silver and lead producer
Project Location▪ Tier 1 project - Poised to become a global top 10 producing silver mine (+10Moz p.a.)3, the 3rd largest-producing lead mine and a globally significant zinc project4
▪ Scale and grade with substantial upside - 100Mt resource at 3.1 Oz/t Ag, 4.0% Pb, 1.9% Zn and 0.2% Cu1 and remains open in all directions, with a recent history of exploration success and an emerging copper story
▪ Compelling PFS economics - Starter Pit delivers an NPV8% of US$580 million and IRR of 30% from processing just 24% of project Mineral Resources5
▪ Low Cost – lowest capital intensity among peer projects and lowest quartile on the cost curve6
▪ Permitted for mining - Brownfields project with an existing mining concession, fiscal terms and a long track record of production
▪ Highly strategic – long-life project with 100% offtake unencumbered, shipping by road to smelters in China
For
per
sona
l use
onl
y
Bawdwin’s Silver Lining
6
Over 212 Moz produced from Bawdwin but there is much more to come…
▪ Bawdwin’s current resources place the project amongst the greatest silver and lead mines and projects in the world
▪ 212 Moz of silver have been produced from Bawdwin (15Mt at 14 oz/t Ag)7
▪ A further 314 Moz of contained silver in current Mineral Resource estimates but the Bawdwin mineral province is open in every direction1
▪ In steady state, Bawdwin is expected to produce over 10 Mozpa of silver 3
▪ High silver grades over wide intervals, for example: 16 Oz/t Ag, 24.2% Pb, 12.0% Zn, 1.5% Cu over 18 metres8
▪ Ranked against primary lead projects, Bawdwin presents as the largest global lead project, with over 4Mt of contained lead4
0
200
400
600
800
1000
1200
1400
1600
1800
Global Top 15 Primary Silver Projects by Contained Silver Metal9
MO
z
For
per
sona
l use
onl
y
Strong Outlook for Silver
7
Silver price is starting to react to physical deficit and market conditions
▪ Silver demand grew 4% in 2018
▪ Physical market is in deficit as is the market for exchange traded silver products
▪ Industrial demand is supported by long term growth in electronics and electrical products and more recently rapid growth in the solar industry
▪ Growth in silver demand for coins and bar was 21% in 2018. Demand in jewellery has also remained strong
▪ On supply side, mine production has fallen each of the past 3 years
▪ The elevated gold / silver ratio (1 oz Au / 89 oz Ag) and its potential for mean reversion (1oz of Au / 67oz Ag) is a significant catalyst for silver prices.11 At spot gold prices (US$1,500 oz) a mean reversion would result in silver prices of over US$22/oz
Physical Silver Surplus / Deficit 10
10
15
20
25
30
35
40
-150
-100
-50
0
50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
US$
/Oz
Mo
z
Supply / Demand Balance Real Silver Price
?
0
200
400
600
800
1000
1200
1400
2010 2011 2012 2013 2014 2015 2016 2017 2018
Mo
zJewelry & Silverware Coins & Bars Industrial
Physical Silver Demand by Application 10
For
per
sona
l use
onl
y
Lead – Battery Metal for the Developing World
8
World Lead Demand 12
▪ Lead demand has experienced a compound annual growth rate of 4% p.a. for the 20 years to 2017. Growth in demand has largely originated in China12
▪ Lead demand is price inelastic in its main application (lead acid batteries)
▪ Although substitution to lighter lithium batteries is occurring in some sectors, the developing world is expected to rely on cheap, modular and readily accessible lead acid batteries for energy storage
▪ Every automobile, electric or otherwise, contains a lead-acid battery to run the 12V system
▪ Lead production from Bawdwin’s starter pit would place Bawdwin within the Top 3 global producing lead mines in the world4
Strong demand underpins a robust outlook for lead
Under the bonnet of a Nissan Leaf – note the lead-acid battery centre bottom(image: autonews.uk.com)
For
per
sona
l use
onl
y
Bawdwin Reserves and Resources
9
“Based on silver mineral resource size and grade, only Bawdwin and Cannington can be assigned world class status.”13
ClassificationTonnes Pb Grade Ag Grade Zn Grade Cu Grade
(Mt) (%) (oz/t) (%) (%)
Proved - - - - -
Probable 18.4 6.4 5.4 3.4 -
Total Ore Reserves 18.4 6.4 5.4 3.4 -
Indicated 42.4 4.0 3.2 2.0 0.2
Inferred 58.2 4.1 3.1 1.8 0.2
Total Mineral Resources 100.6 4.0 3.1 1.9 0.2
Global Project Ore Reserves and Mineral Resources1 Mineral Resource, Silver Grade v Tonnage 13
Cross section (looking grid north) showing resource block model coloured for lead grade and recent drillhole BWDD034 on Yegon Ridge
Mine
Project
Cerro Bayo, EQE
Casposo, AGD
Veovaca, ADT
Paris, IVR
Rupice, ADT
Alacran, AZS
Nimbus, HRZ
Red Mountain, WRM
Mt Carrington, WRM
Kempfield, ARD
Sorby Hills, PMY
Maronan, RDM
Nueva Esperanza, KCN
Berenguela, VAL
Century (tailings), NCZ
Cannington, S32
Bawdwin, MYL
Bowdens, SVL0
50
100
150
200
250
300
350
0 20 40 60 80 100 120 140
Silv
er
Gra
de (
g/t A
g)
Mineral Resources (million tonnes)
For
per
sona
l use
onl
y
Wireframe of the Entire Bawdwin Mineral Resource Deposit Commentary
Bawdwin Starter Pit
10
Starter Pit focuses on the central China Lode and will be mined down to 220 metres below the current valley floor for an initial 13-year mine life
Starter Pit
▪ Conventional drill, blast, load and haul mining operation
▪ 8-month ramp-up commencing 2021
▪ 88% of the processed material is fresh sulphide mineralisation and 12% is transitional
▪ 74% of the processed material is from the Probable Ore Reserve category and 26% is from the Inferred Mineral Resource category
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Ton
nes
(kt
)Waste Mined Reserve Inferred
Mining schedule (by category of material)
Shan Lode
China Lode
Meingtha LodePb%
3D View – Looking Northeast
For
per
sona
l use
onl
y
Operational Metrics5 Starter Pit Financial Metrics5 (USD M)
Bawdwin Starter Pit PFS
11
The PFS delivers robust economics based on a 13 year Starter Pit processing only 24% of currently defined Mineral Resources of 100.6Mt
Revenue ▪ 5,891.0
Operating Costs ▪ 2,655.0
EBITDA ▪ 1,785.0
Free Cashflow ▪ 1,458.0
Starter Pit Mine Life ▪ 13 years
Processing Plant Throughput ▪ 2 Mtpa
Ore Mined ▪ 24.7 Mt
Strip Ratio ▪ 8.0
Average Grade
▪ Lead: 6.4%
▪ Silver: 168.1g/t
▪ Zinc: 3.2%
Steady State Annual Production▪ Lead-Silver Concentrate: 196ktpa
▪ Zinc Concentrate: 93ktpa
Weighted Average Concentrate Grade
▪ Lead Concentrate: 60%
▪ Silver in Lead Concentrate: 38oz/t
▪ Zinc Concentrate: 53%
Metallurgical Recovery
▪ Lead: 87%
▪ Silver in Lead Concentrate: 85%
▪ Zinc: 70%
On-Site Capital Expenditure ▪ 196.0
Owners Costs ▪ 71.0
Sub-total ▪ 267.0
Contingency ▪ 33.0
Total ▪ 300.0
Operating Costs ▪ US$107.9/t
Pre-Tax NPV (8% real discount rate) ▪ US$580 m.
IRR ▪ 30%
Payback Period ▪ 4 years
Value Benchmarks5
Pre-production Capital Expenditure5(USD M)
For
per
sona
l use
onl
y
Bawdwin Project Pipeline
12
A full project pipeline has been developed at Bawdwin Bawdwin Project Pipeline 1
▪ Foundations for a long-life mining operation:
― The 13-year Starter Pit is Phase 1 of mining operations at Bawdwin
― Phase 2 will target the un-mined mineral resources of the China, Shan and Meingtha Lodes by cut-backs to the starter pit and/or underground mining
― Appraisal programs will define the mineral resources of drill tested targets
― Exploration will test new prospects and leads
For
per
sona
l use
onl
y
Outstanding Exploration Upside
13
Already a Silver Star and a Lead Leader, Bawdwin has an emerging Copper Story.
Bawdwin Concession Showing Exploration Targets
Copper “soak” Gossan outcrop
Chin Lode
PR Valley
Shan NorthER Valley
SW Anomaly
Yegon DeepsPangyunJunction
▪ Copper-rich resource already declared
— Copper-rich Mineral Resource of 4.4 Mt at 2.9% Cu, 4.7% Pb, 5.0 oz/t Ag and 2.2% Zn, contained within global 100Mt Mineral Resource Estimate14
▪ Strong pipeline of prospective targets
— High grade copper lode (5.5% Cu) discovered in ER Valley
— Chin/Chin South and Yegon Ridge show high copper in historical assays and drill core
— Five high priority exploration targets exhibit similar geophysical properties to the known lodes
— Drilling-to-date at Shan, China and Meingtha Lodes have not yet reached the base of the historical workings
— Further drilling and testwork to explore the unexploited portion of the Bawdwin deposit
— Bawdwin Mineral Province is open along strike, at depth and parallel to strike
For
per
sona
l use
onl
y
Myanmar – Emerging Investment DestinationInvestment conditions favourable, MYL’s experienced local partners de-risk the project
Business in Myanmar
▪ Myanmar is opening up and attracting major international investors from a variety of sectors including: Ford, Unilever and Telenor
▪ Democratic elections held in 2015 and US sanctions lifted in 2016
▪ 2018 Mining Rules have increased the maximum mine life for large scale production projects, clarified rights to production for explorers and introduced alternative fiscal regimes
In-Country initiatives to de-risk our project
▪ Regular engagement with Government agencies
▪ Creation of job opportunities for local communities
▪ Social investment program initially focusing on education and healthcare
▪ Environmental and social impact assessments in accordance with best practices
Strategic Steps to Manage Sovereign Risk
▪ Shared vision with government of flagship mine to manage investment risk
▪ Strategic Chinese shareholder in Perilya Limited (Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd.)
▪ Partners are strong local lobbyists to manage in-country risk
▪ Partners are heavily invested to manage local operational risk
Myanmar’s major mines
For
per
sona
l use
onl
y
Summary
15
▪ World class resource, 100.6 Mt at 3.1oz/t Ag, 4.0% Pb, 1.9% Zn and 0.2% Cu1, which is open in all directions
▪ Existing Mining Concession & Production Sharing Agreement provides path to accelerated re-development program
▪ Pre-Feasibility Study complete and Ore Reserve declared
▪ Experienced board and management team assembled with leading international and local partners
▪ Sovereign risk mitigated via strategic local partners
▪ Significant, value- accretive project milestones will be realised in the next 9 months
MYL is positioned to become a leading regional base metals producer
Drill access road to ER Valley
For
per
sona
l use
onl
y
Notes
16
1. Ore Reserve and Mineral Resource Estimate reported in accordance with the JORC Code 2012 Edition as announced on 6 May 2019 and 8 August 2019, respectively. Probable Ore Reserves are included in the Indicated Mineral Resources. Myanmar Metals Limited confirms that it is not aware of any new information or data that materially affects the Reserve and Resource information included in the market announcements dated 6 May 2019 and 8 August 2019, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. A 0.5% Pb cut-off above 750m RL, 2% Pb below 750m RL has been used for the 100.6 Mt Indicated and Inferred Resources and the 42.4 Mt Indicated Resource. The high grade 47Mt Indicated and Inferred Resources has a global cut-off of 2% Pb. The cut-off used for the determination of Ore Reserves is a net value per block of ore (net smelter return)
2. Metrics are based on the reference dates of 23/10/17, 21/11/18 and 24/10/19 being the dates of the annual general meetings in 2017, 2018, 2019. Cash is the last reported cash figure before the AGM. Market capitalisation is calculated on the closing date before the AGM.
3. Based on Starter Pit Pre-Feasibility Study, as announced on the ASX 6 May 2019
4. Based on data sourced from S&P Global Market Intelligence as at 10 April 2019. Information sourced from reported 2018 annual production metrics from project operators.
5. Net present value and internal rate of return presented pre corporate tax and MYL corporate overheads but post royalties and production sharing taxation. MYL holds a 51% participating interest in the Bawdwin project. FX rate used AUD:USD 0.7. See announcement dated 6 May 2019 for detailed assumptions.
6. S&P Global Market Intelligence. Dataset includes all feasibility studies that include lead as a payable metal filtered by (1) PbEq. And/or ZnEq. Production > 50ktpa, (2) mine life > 10 years, (3) at least pre-feasibility study level, and (4) market capitalisation > $50.0 million. Based on data sourced from S&P Global Market Intelligence (S&P MI) as at 10 April 2019. Zinc cost curve with by-product credits applied. Basis of net cash costs calculation: life of Starter Pit total operating costs (including royalties and production sharing taxation) of US$4.1bn less revenues from lead and silver (US$4.7bn), divided by Life of Starter Pit zinc production of 555 kt (see Table 8). Converted from tonnes to pounds using standard conversion (1 tonne = 2,205 pounds).
7. Estimate of historical production from the Canadian International Development Agency
8. Myanmar Metals drill hole BWRCD003 from 173 – 192 metres
9. S&P Global Market Intelligence. Bawdwin is classified as a primary lead project by S&P but can be regarded as a primary silver project depending on metal price movements. Bawdwin is shown against primary silver projects for comparative purposes. S&P data includes project reserves and resources from all mining operations and pre-production projects. Data as at 2 August 201
10. World Silver Survey 2019. GFMS, The Global Silver Institute, Refinitiv. 2019 Silver price is the average spot silver price for the year to 20/8/19
11. Bloomberg Intelligence. Golds Future May Be in Silver’s Hands (14/8/19)
12. International Lead and Zinc Study Group
13. Terra Studio, Silver Market Review and How to Get Exposure on the ASX (September 2019)
14. Copper domains in 8 August 2019 Mineral Resource Estimate. All statements made to Note 1 apply to Note 14. A 0.5% Cu cut-off has been applied to the copper domains
For
per
sona
l use
onl
y
ExplorationF
or p
erso
nal u
se o
nly
Community Development
18
For
per
sona
l use
onl
y
Site refurbishment and new facilities
19
For
per
sona
l use
onl
y
20
ASX : MYLwww.myanmarmetals.com.au
For
per
sona
l use
onl
y
top related